‘Fewer employers are offering health benefits to workers, even as premiums continue to rise, posting a 9.2 per cent increase in 2005 – three times the increase in workers’ wages’, says the AFL-CIO US labour federation.
It added last weekend: ‘The 2005 Employer Health Benefits Annual Survey provides a detailed look at these trends, exploring employer-based health coverage, changes in premiums, employee contribution and the use of consumer-driven health plans.’
The 2005 survey of public and private firms with three or more employees, published last week, was conducted and analysed jointly by the Kaiser Family Foundation and the Health Research & Educational Trust.
The Kaiser Family Foundation press statement last Friday said: ‘The percentage of businesses offering health insurance to their workers has declined steadily over the last five years as the cost of providing coverage continues to outpace inflation and wage growth.
‘The survey found that three in five firms (60 per cent) offered coverage to workers in 2005, down significantly from 69 per cent in 2000 and 66 per cent in 2003.
‘The drop stems almost entirely from fewer small businesses offering health benefits, as nearly all businesses (98 per cent) with 200 or more workers offer such benefits.’
‘It is low-wage workers who are being hurt the most by the steady drip, drip, drip of coverage draining out of the employer based health insurance system,’ Kaiser Family Foundation President and CEO Drew E. Altman, said.
The press statement continued: ‘Premiums increased an average of 9.2 per cent in 2005, down from the 11.2 per cent average found in 2004.
‘The 2005 increase ended four consecutive years of double-digit increases, but the rate of growth is still more than three times the growth in workers’ earnings (2.7 per cent) and two-and-a-half times the rate of inflation (3.5 per cent).
‘Since 2000, premiums have gone up 73 per cent.
‘The annual premiums for family coverage reached $10,880 in 2005, eclipsing the gross earnings for a full-time minimum-wage worker ($10,712).
‘The average worker paid $2,713 toward premiums for family coverage in 2005 or 26 per cent of the total health premium.
‘While workers’ share of their premium has been relatively stable over the past few years, they are now paying on average $1,094 more in premiums for family coverage than they did in 2000.’
Health Research and Educational Trust President Mary A Pittman said: ‘While premium increases slowed this year, they continue to rise much faster than inflation and other economic indicators. As a result, workers and businesses alike are finding it harder to afford health coverage.’
The statement added: ‘The survey found that 20 per cent of employers who offer health insurance now provide a high-deductible health plan option. Jumbo firms – those with 5,000 or more workers – are significantly more likely than smaller firms to offer a high-deductible plan option, with 33 per cent offering one in 2005.
‘The survey defines high-deductible health plans as those with at least a $1,000 deductible for single coverage or at least a $2,000 deductible for family coverage.
‘Among employers who offer a high-deductible plan, relatively few (19.5 per cent, or 3.9 per cent of all offering employers) also make a contribution to a health reimbursement arrangement (HRA), offer a plan that would permit an enrollee to establish a health savings account (HSA), or do both. HRAs and HSAs are tax-favoured accounts that employees can use to pay for medical expenses.
‘Such arrangements are often described as consumer-driven because patients pay for a greater share of their health care directly, rather than through insurers, and therefore may have a financial incentive to reduce their health-care spending.
‘Despite the growing availability of high-deductible plans, relatively few workers are enrolled in consumer-driven arrangements.
‘The survey estimates that this year about 2.3 per cent of non-federal covered workers, or 1.6 million people, are enrolled in high-deductible health plans with an HRA, and about 1.2 per cent, or 810,000 people, are enrolled in plans that are eligible for use with an HSA.’
‘Consumer-driven plans are proving attractive to some, but with just a couple million people now enrolled, it’s too early to know whether they’ll have a meaningful effect on the health system,’ said Gary Claxton, a Kaiser Family Foundation vice president and co-author of the study.
‘The jury is still out on whether employees feel that these arrangements work for them, particularly when they get sick, and on whether employers feel that they have a real impact on costs.’
The Kaiser statement continued: ‘The survey also provides a detailed look at the features of high-deductible health plans, including premiums, deductibles, use of spending accounts, and employer and worker contributions.
‘Such plans can cost less than other forms of employer-sponsored health coverage, but also leave workers exposed to greater potential out-of-pocket costs.’
Other highlights from the 2005 survey include:
• Reasons for not offering coverage. Firms that do not offer health benefits to their workers – the overwhelming majority of whom are small firms – were most likely to cite cost as a key factor, with nearly three in four (73 per cent) saying high premiums were ‘very important’ to their decision.
In comparison, just over half (52 per cent) said their firm’s small size and one in three (33 per cent) said the fact that their workers had access to other coverage were very important to their decision.
• Type of insurance. In 2005, PPO (preferred provider organisations) plans were more common than ever, with 61 per cent of all employees with health coverage enrolling in a PPO (up from 55 per cent in 2004). Enrolment in HMOs (health management organisations), which generally cost less than PPOs, fell to 21 per cent in 2005 from 25 per cent in 2004.
Conventional, or indemnity, benefit plans have all but disappeared, covering just 3 per cent of covered workers.
• Future plans. Looking toward the future, more than 40 per cent of large firms (200 or more workers) offering health benefits say they are ‘very likely’ to ask employees to pay more in premiums next year, while just 15 per cent of smaller firms say they plan to do so.
Across all firms offering coverage, relatively few say that they are ‘very likely’ in the next year to raise deductibles (8 per cent), raise office visit cost-sharing (7 per cent) or raise prescription drug copayments (7 per cent).
About 1 per cent of firms say they are ‘very likely’ to drop health coverage entirely in the near future.
• Utilisation and disease management. About eight in 10 covered workers (81 per cent) are in a health plan that uses case management for high-cost claims.
Most covered workers also must get prior certification for inpatient services (75 per cent) and outpatient surgery (55 per cent).
More than half (56 per cent) of covered workers are enrolled in a plan with at least one disease management programme.
Among workers in these plans, virtually all (99 per cent) are in a plan that provides management for diabetes.
Large majorities are also in plans that provide management for asthma (86 per cent), hypertension (82 per cent), and high cholesterol (66 per cent).